Budget 2016-17 – Budget Impact on Individual Assessee, Tax proposals

Every year Union Budget was released by Arun Jaitley, Finance Minister, Government of India. The Assessee can check the Latest Union Budget Proposals and their Impacts that are imposed in the Budget 2016-17.

Union Budget 2016-17 – Budget Proposals

S.no.

Proposal

Impact

1.

Increase limit for a Tax rebate to Rs. 5,000/- from Rs. 2,000/- for individual residents with a total income of up to Rs. 5 lakhs per year.

This will ensure an additional saving of Rs. 3,090/- for small taxpayers.

2.

Raise Deduction limit for rent paid by an individual who doesn’t have a house and isn’t entitled to House Rent Allowance from the employer to Rs. 60,000/- per annum from Rs. 24,000/- per annum.

Will allow the individual to claim an additional deduction of Rs. 36,000/- per annum, leading to a tax-saving of up to Rs. 13,015.

3.

Under the current provisions, dividend received by an individual from an Indian company is exempt from tax as DDT (Dividend Distribution Tax) which is already paid by a firm. It is proposed to charge on the individual as an additional tax at the rate of 10% on the dividend received is more than Rs. 10,00,000/-.

It will ensure that dividend earned by the super-rich is also subject to tax in addition to the 15% DDT paid by the Indian firms. The maximum effective tax that the dividend bear will be 32.21% (i.e. 20.36% plus 11.85%).

4.

Increase the rate of surcharge on income that is Rs. 1 crore to 15% from 12%.

This will raise the maximum marginal rate of tax to 35.54% from 34.61% on the super-rich.

5.

Make gains under the Sovereign Gold Bond Scheme, 2015, exempt from tax. Also, provide indexation benefit on the transfer of the gold bonds.

It will give incentive for investing in gold bonds instead of the physical form.

6.

For rupee-denominated bonds, give tax exemption to non-resident investors on gains arising from currency appreciation between the dates of issue and redemption.

This will attract non-resident investors to rupee-denominated bonds and help Indian companies raise funds abroad.

7.

Don’t subject NRIs to a higher rate of Tax Deducted at Source due to unavailability of PAN (Permanent Account Number) if they fulfil certain conditions.

Will bring significant relief to NRIs.

8.

Introduce e-assessment and do away with a physical presence during tax hearings.

It will lead to an increase in paperless assessment and less face-to-face interaction between the taxpayer and income-tax officers.

9.

Increase the threshold limit for Tax Deducted on Source (TDS) in the case of withdrawal of PF (Provident Fund) balances to Rs. 50,000/- from Rs. 30,000/-.

Individuals with accumulated PF balances of up to Rs. 50,000/- will now not be subject to TDS (Tax Deducted at Source) on withdrawal.

10.

Individuals with rental income less than the maximum amount not chargeable to tax should furnish Form 15G/15H for non-withholding of Tax Deducted at Source (TDS).

This will bring huge relief to senior citizens and small taxpayers who have nil taxable income or income below the threshold limit but had to file IT return to claim refunds of TDS(Tax Deducted at Source) deducted from the rental income.

11.

Include exempt income from long-term capital gains on the sale of equity-oriented mutual funds or equity shares to determine whether an individual is liable to file Income Tax return.

To determine the requirement for filing a tax return, long-term capital gains on the sale of equity shares or equity-oriented mutual funds that are exempt from tax also need to be included. Also, individuals with only exempt income from long-term capital gains on the sale of equity shares or equity-oriented mutual funds will now be required to file a return if the total exempt income is more than the maximum amount not chargeable to tax (currently Rs. 2.5 lakhs).

12.

Reduce the time-limit for the filing of the belated return to any time before the end of the assessment year or completion of the assessment, whichever is earlier. However, allow a belated return to revised within a year from the end of the relevant assessment year or completion of assessment, whichever is earlier.

It will reduce the time-limit for filing a belated return to one year from two years and encourage timely compliance. Revision of belated return will now be permitted, which was not possible earlier.

13.

Amend advance tax payment schedule for individuals as

15% of tax payable by June 15.

45% of tax payable by September 15.

75% of tax payable by December 15 and

100% of tax payable by March 15.

This will increase the compliance burden.

14.

Don’t subject to tax shares received by an individual in consequence of demerger or amalgamation of firms without adequate consideration.

Will bring uniformity in the tax treatment of shares.

15.

Exempt withdrawal in respect of contributions made on or after 1st April 2016, from a recognised provident fund and an approved superannuation fund, up to 40% of the accumulated balance.

This will increase the overall tax liability.

16.

Exempt 40% of the total amount payable to individuals on closure/ opting out of NPS.

Will reduce tax liability.

For more details about Union Budget 2016-2017 click on the link given below.

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